Albany & Eastern Railroad Company v. Martell

Under Halperin v. Pitts, 352 Or 482 (2012) and the statute’s structure, ORS 20.080(2) permits attorney fee awards to defendants prevailing on equitable counterclaims, provided other requirements of the statute are met.

Albany & Eastern Railroad Company (AERC) appealed an award of attorney fees to Defendants after Defendants prevailed on an equitable counterclaim. This case appeared on remand from the Oregon Supreme Court. On appeal, AERC argued that ORS 20.080 permits attorney fees only in “small tort actions at law[,]” and therefore did not allow Defendants to recover fees based on their equitable counterclaim. In response, Defendants argued that ORS 20.080 permits any counterclaim to “serve as the basis for attorney fees” when a legal claim is presented in the initial pleading. Under Halperin v. Pitts, 352 Or 482 (2012) and the statute’s structure, ORS 20.080(2) permits attorney fee awards to defendants prevailing on equitable counterclaims, provided other requirements of the statute are met. The Court found that the text of the statute and surrounding context were unclear whether attorney fees may be awarded to defendants prevailing on equitable counterclaims. The Court observed that in Halperin, ORS 20.080 was understood to impose distinct requirements on plaintiffs, in section one, and defendants, in section two. The Court reasoned that since section two does not require that a defendant’s counterclaim be “for damages,” while section one does, a counterclaim may be equitable, although a plaintiff’s claim cannot. Affirmed.